Common QuickBooks Errors and How to Avoid Them

Chances are you use QuickBooks, a popular accounting software among small businesses. It helps manage income and expenses while allowing the business to track its financial health. However, it’s common for business owners to make mistakes that make bookkeeping difficult and even more time-consuming than it already is. To help you circumvent these issues we’ve compiled a list of a few common QuickBooks errors and how to avoid them.

 

Forgetting To Lock A Closed Period

Locking a closed period, whether a month, a quarter, or more, is crucial as it prevents anyone entering transactions or adjusting the books from changing the information for a period that has already been closed and reported on. Only the administrator of the account should know the closing password to avoid any confusion. To set this password go to Edit Preferences – Accounting – Company Preferences – Set Date/Password.

 

You Have Incorrect Report Settings

Having the incorrect report settings can set you up to make more mistakes later. Cash reports account for revenue and expenses when money is disbursed or received. Accrual reports account for revenue when it is earned and when expenses are incurred. An accrual report also accounts for expenses when the money hasn’t been disbursed or received. Make sure you are using the report types most beneficial to your tax and financial planning – ask your accountant if you’re not sure what that would be.

 

Lack of Reconciliation With Bank Account And Credit Cards

An important step, often skipped or put off, is going through each transaction on a monthly or quarterly basis to ensure that everything is hitting the correct income or expense account, and is cleared with the bank. This should be done with all bank, credit card, and loan accounts to ensure that nothing was missed.

 

Missing Transactions

It’s easy to fall behind on keeping track of your records, especially when you’re busy running your business. Playing catch-up at the end of the month, quarter, or year, is a difficult and exhausting process, which is why it’s easier to keep track as you go so your books reflect your current and accurate finances. This allows you to have and keep a better sense of your business’s financial health.

 

Not Backing Up Data

What would you do if you lost all the data on your QuickBooks account due to a computer crash? While you could attempt to recover what you can, chances are a lot of the information you need would be lost. To plan for the unexpected, back up your desktop file at the end of the day by going to File – Backup Company – Create Local Backup. If you are using QuickBooks Online your company data is automatically backed up to the cloud.

 

Recording Loan Payments As An Expense

If you have a business loan, record the original balance in the balance sheet as a short or long-term liability instead of as an expense. When making a monthly payment, break the payment down into principal and interest by recording the interest portion as a business expense on the income statement and the principal against the loan balance on the balance sheet.

 

Not Outsourcing Your Bookkeeping

When you have a small business, you likely started out wearing many hats and doing everything yourself. However, there are only so many hours in a day to focus on each part of running your business, and you’re stretching yourself thin by doing everything yourself, especially if you have limited accounting knowledge.

 

At Taurus CPA Solutions, we offer a broad range of professional services and take the fear out of finances by providing our clients with solutions. Our accounting experts can help business owners reduce stress by allowing them to outsource the work to our trustworthy accounting specialists. Reach out to us by filling out our online form or calling us at 410-465-4600 and talking to an expert about your accounting needs.